Discretion under the Civil Procedure Act 2005 (NSW)
The power of courts in NSW to award costs to litigants is conferred by the Civil Procedure Act 2005 (NSW) (Act), which gives the court full power to determine by whom, to whom and to what extent costs are to be paid, and the basis on which they are to be paid, regardless of how advanced the litigation is (subject to any statutory provisions to the contrary).
There are various statutory provisions providing for lump sum or fixed costs events, such as in matters before the Small Claims Division of the Local Court, in undefended recoveries of liquidated debts and when enforcing judgment debts. These costs are provided in schedule 1 of the relevant Local, District and Supreme Court Acts.
The Supreme Court provides the mechanism for the costs assessment process for all costs orders made in inferior courts and tribunals.
Whilst an important tool in the litigation spectrum, costs assessment does necessarily require further time and expenditure. Happily, the Act provides an alternative to the often protracted and expensive costs assessment process.
Section 98 Civil Procedure Act 2005 (NSW)
Section 98(4)(c) of the Act permits a court to make a gross sum costs order instead of referring the matter for assessment.
CIVIL PROCEDURE ACT 2005 – SECT 98
Courts powers as to costs:
- Subject to rules of court and to this or any other Act-
- costs are in the discretion of the court, and
- the court has full power to determine by whom, to whom and to what extent costs are to be paid, and,
- the court may order that costs are to be awarded on the ordinary basis or on an indemnity basis.
Subject to rules of court and to this or any other Act, a party to proceedings may not recover costs from any other party otherwise than pursuant to an order of the court. An order as to costs may be made by the court at any stage of the proceedings or after the conclusion of the proceedings.
In particular, at any time before costs are referred for assessment, the court may make an order to the effect that the party to whom costs are to be paid is to be entitled to:
- costs up to, or from, a specified stage of the proceedings, or
- a specified proportion of the assessed costs, or
- a specified gross sum instead of assessed costs, or
- such proportion of the assessed costs as does not exceed a specified amount.
The powers of the court under this section apply in relation to a married woman, whether as party, tutor, relator or otherwise, and this section has effect in addition to, and despite anything in, the Married Persons (Equality of Status) Act 1996.
- the costs of the administration of any estate or trust, and
- in the case of an appeal to the court, the costs of the proceedings giving rise to the appeal, and
- in the case of proceedings transferred or removed into the court, the costs of the proceedings before they were transferred or removed.
This power “should only be exercised when the Court considered that it can do so fairly between the parties, and this includes sufficient confidence in arriving at an appropriate sum on the materials available”: Harrison v Schipp (2002) 54 NSWLR at .
If a gross sum costs order is made at the conclusion of the proceeding then the whole costs assessment task can be avoided and secondly, as there is an order in a fixed amount it can be entered as a judgment if payment does not occur.
When will such an order be appropriate:
Gross sum costs order are regularly advanced in the following situations:
- where the subject matter of the litigation concerns modest sums of money;
- where costs assessment would be “protracted and expensive”: see Hamod v New South Wales  NSWCA 375, ;
- where there is a risk of “satellite litigation” if costs are assessed: see Pritchard v Fryer (No 2)  NSWSC 261, ;
- where the evidence reveals that the party awarded costs is unlikely, due to the financial position of the unsuccessful party, to be able to recover all its taxed costs in due course: see Dye v Commonwealth Securities Ltd (No. 2)  FCA 407, ; and
- where the expense and delay of taxation is disproportionate to the amount of the costs recoverable: see Ross v Ross (No 5)  WASC 278, .
Making the Application
An application for a specific gross sum costs order is made by way of separate motion that requires evidence sufficient to support the application. Any affidavit material relied upon in support of a motion for a gross sum costs order should contain enough information for the court to make a decision as to appropriate quantum.
We’re here to help
We at Chamberlains understand the stresses and expenses that come with running a litigated matter, and additional difficulty that costs assessment can sometimes bring.
Should you require further information about how costs can be recoverable in NSW, please do not hesitate to contact our office for a consultation.